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Tuesday, June 22, 2010

It's 11 p.m.--Do You Know Where Your Money Is?

retirement savings go up in smoke...

Many public pension funds have been singed by the shrinking market capitalization of British Petroleum in the wake of the ongoing oil spill in the Gulf of Mexico. Bloomberg reports that 42 state retirement systems have lost a collective $1.4 billion as BP's stock price finds its way to Davy Jones' Locker, right down there with the Deepwater rig. In fact, BP now stands for Busted Pension.

Inquiring minds would like to know if the Maine Public Employees Retirement System (MainePERS), with over 60% of its assets in stocks, is among those Blown-uP. Unfortunately, the MainePERS website lists only its top ten holdings, so it is not clear what exactly is the state's exposure to the Gulf catastrophe.

Largest Holdings as of March 31, 2010:

Market Value

($)

Exxon Mobil

71,959,159

Microsoft

55,653,480

Apple

47,963,074

General Electric

47,801,681

Bank of America

45,629,830

JP Morgan Chase

45,215,848

IBM

44,158,655

Procter & Gamble

42,228,106

Johnson & Johnson

41,050,050

Cisco Systems

40,596,648

Top 10 Equities

482,256,533

Personally, I would be concerned about the bank holdings in this group. In a deflating economy these will get hammered. Over the past ten years MainePERS has achieved an annualized return of roughly 3%, which is probably insufficient to cover growing liabilities.